- Economic growth in Central Asian republics will be higher than the global average in the future
- German businesses see increasing opportunities in the region
The significance of the Central Asian republics and Mongolia will increase further, even if the boom seen in past years is probably over for the time being. This is the conclusion reached in a recent publication by Commerzbank.
“As a result of the proximity to China and Russia, the vast amount of catching-up vis-à-vis the industrialised nations, high foreign investment, and the long period of excellent global economic development, Central Asia and Mongolia have been able to rapidly industrialise and post high growth figures since the start of the new millennium,” explained Rainer Schäfer, Head of Country Risk Analysis at Commerzbank. “In the majority of these countries, raw materials continue to dominate foreign trade and foreign exchange inflow. The reserves of natural gas, gold, and copper, as well as the production of cotton, are of global significance; yet development in this area is not over by far, despite significant infrastructure investment taking place. Greater diversification with a simultaneous reduction in the high degree of government regulation is necessary so as to secure long-term prosperity in the Central Asian region.”
The differences between the countries in the region are substantial, however. The most important trading partner for Germany is currently Kazakhstan, which has profited from the energy boom of the past decade thanks to its extensive oil reserves. The rapid rise of China and the associated increase in demand for raw materials saw an increase in prices, driving rapid growth in the country – which also has other resources in abundance. Measured in terms of the per capita gross domestic product (GDP) Kazakhstan has, as a result, virtually caught up with Russia, and is thus the richest nation in the region by far. Kazakhstan is also clearly ahead of China, where GDP per capita is US$7,000, placing the country on about the same level as Turkmenistan, which has major natural gas reserves and is expanding its processing capacities. Neighbouring Uzbekistan has a position among the top ten gold exporting nations and cotton producers. It has rich uranium deposits and energy reserves, as well as major development opportunities in the “silk road tourism” sector and a diversified manufacturing industry.
Tajikistan and Kyrgyzstan have major water resources, which are also of significance to their neighbouring countries. Both countries are heavily dependent on remittances from immigrant workers employed in Russia. To date, Mongolia has only been able to utilise a small portion of the development potential of the country’s massive raw material deposits.
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Despite the dynamic growth rates seen in past years, the potential cooperation between Germany – a major exporter and high-tech leader – and Central Asia/Mongolia has not yet been tapped in full.
“We assume that in the future economic growth in the region will be considerably higher than the global average, and that, as a result, business relations with Germany will be further intensified,” said Axel N. Bommersheim, Regional Head at Commerzbank – Financial Institutions. Commerzbank already accounts for a substantial portion of the processing and financing of foreign trade dealings with Central Asia and Mongolia. The Bank has been present in the region for many years with its own representative offices in Kazakhstan, Turkmenistan, and Uzbekistan, which also serve the neighbouring countries of Kyrgyzstan, Tajikistan, and Mongolia. It has a network of 5,000 correspondent banks worldwide and maintains close relationships with a number of international financial institutions such as the European Bank for Reconstruction and Development (ERBD), the World Bank subsidiary International Finance Corporation (IFC), and the Asian Development Bank (ADB).
“We regard the training and further qualification of the employees of local banks as an important task,” explained Bommersheim. “In this manner Commerzbank can make a decisive contribution to greater professionalism in the region’s banking sector.”